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Serfdom Cartoons Hayek

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Hayek: the Road to Serfdom. Central Planning at a Crossroads

Hayek: the Road to Serfdom. Central Planning at a Crossroads

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  • 1. The Road to Serfdom with The Intellectuals and Socialism FRIEDRICH A. HAYEK the condensed version of the road to serfdom b y f . a . h ay e k a s i t a p p e a r e d i n t h e a p r i l 1 9 4 5 e d i t i o n o f r e a d e r’ s d i g e stThe Institute of Economic Affairs
  • 2. PREFACE TO THE READER’S DIGEST SUMMARY CONDENSED VERSION OF (Jacket notes written by Hayek for the first edition) THE ROAD TO SERFDOM ‘In The Road to Serfdom’, writes Henry Hazlitt in the New York • Is there a greater tragedy imaginable than that in our Times, ‘Friedrich A. Hayek has written one of the most important endeavour consciously to shape our future in accordance with books of our generation. It restates for our time the issue between high ideals we should in fact unwittingly produce the very liberty and authority. It is an arresting call to all well-intentioned opposite of what we have been striving for? planners and socialists, to all those who are sincere democrats and • The contention that only the peculiar wickedness of the liberals at heart, to stop, look and listen.’ Germans has produced the Nazi system is likely to become The author is an internationally known economist. An Austrian the excuse for forcing on us the very institutions which have by birth, he was director of the Austrian Institute for Economic produced that wickedness. Research and lecturer in economics at the University of Vienna • Totalitarianism is the new word we have adopted to describe during the years of the rise of fascism in Central Europe. He has the unexpected but nevertheless inseparable manifestations lived in England since 1931 when he became Professor of Economic of what in theory we call socialism. Science at the University of London, and is now a British citizen. • In a planned system we cannot confine collective action to the Professor Hayek, with great power and rigour of reasoning, tasks on which we agree, but are forced to produce agreement sounds a grim warning to Americans and Britons who look to the on everything in order that any action can be taken at all. government to provide the way out of all our economic difficulties. • The more the state ‘plans’ the more difficult planning He demonstrates that fascism and what the Germans correctly becomes for the individual. call National Socialism are the inevitable results of the increasing • The economic freedom which is the prerequisite of any other growth of state control and state power, of national ‘planning’ and freedom cannot be the freedom from economic care which of socialism. the socialists promise us and which can be obtained only by In a foreword to The Road to Serfdom John Chamberlain, book relieving the individual at the same time of the necessity and editor of Harper’s, writes: ‘This book is a warning cry in a time of of the power of choice: it must be the freedom of economic hesitation. It says to us: Stop, look and listen. Its logic is incontest- activity which, with the right of choice, inevitably also carries able, and it should have the widest possible audience.’ the risk and the responsibility of that right.34 35
  • 3. the road to serfdom • What our generation has forgotten is that the system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for The Reader’s Digest condensed version of those who do not. The Road to Serfdom • We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may prevent its use for desirable purposes. • We shall all be the gainers if we can create a world fit for small states to live in. • The first need is to free ourselves of that worst form of contemporary obscurantism which tries to persuade us that what we have done in the recent past was all either wise or unavoidable. We shall not grow wiser before we learn that much that we have done was very foolish.36
  • 4. THE ROAD TO SERFDOM (condensed version, published in the Reader’s Digest, April 1945 edition) The author has spent about half his adult life in his nativeAustria, in close touch with German thought, and the other half inthe United States and England. In the latter period he has becomeincreasingly convinced that some of the forces which destroyedfreedom in Germany are also at work here. The very magnitude of the outrages committed by the NationalSocialists has strengthened the assurance that a totalitariansystem cannot happen here. But let us remember that 15 years agothe possibility of such a thing happening in Germany would haveappeared just as fantastic not only to nine-tenths of the Germansthemselves, but also to the most hostile foreign observer. There are many features which were then regarded as ‘typicallyGerman’ which are now equally familiar in America and England,and many symptoms that point to a further development in thesame direction: the increasing veneration for the state, the fatal-istic acceptance of ‘inevitable trends’, the enthusiasm for ‘organi-zation’ of everything (we now call it ‘planning’). The character of the danger is, if possible, even less understoodhere than it was in Germany. The supreme tragedy is still not seenthat in Germany it was largely people of good will who, by theirsocialist policies, prepared the way for the forces which standfor everything they detest. Few recognize that the rise of fascismand Marxism was not a reaction against the socialist trends of the 39
  • 5. the road to serfdom the road to serfdom preceding period but a necessary outcome of those tendencies. Yet it of some single body power formerly exercised independently by is significant that many of the leaders of these movements, from many, an amount of power is created infinitely greater than any Mussolini down (and including Laval and Quisling) began as that existed before, so much more far-reaching as almost to be socialists and ended as fascists or Nazis. different in kind. In the democracies at present, many who sincerely hate all of It is entirely fallacious to argue that the great power exercised Nazism’s manifestations are working for ideals whose realization by a central planning board would be ‘no greater than the power would lead straight to the abhorred tyranny. Most of the people collectively exercised by private boards of directors’. There is, in whose views influence developments are in some measure social- a competitive society, nobody who can exercise even a fraction ists. They believe that our economic life should be ‘consciously of the power which a socialist planning board would possess. To directed’, that we should substitute ‘economic planning’ for the decentralize power is to reduce the absolute amount of power, and competitive system. Yet is there a greater tragedy imaginable than the competitive system is the only system designed to minimize that, in our endeavour consciously to shape our future in accord- the power exercised by man over man. Who can seriously doubt ance with high ideals, we should in fact unwittingly produce the that the power which a millionaire, who may be my employer, has very opposite of what we have been striving for? over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work? Planning and power In every real sense a badly paid unskilled workman in this In order to achieve their ends the planners must create power country has more freedom to shape his life than many an employer – power over men wielded by other men – of a magnitude never in Germany or a much better paid engineer or manager in Russia. before known. Their success will depend on the extent to which If he wants to change his job or the place where he lives, if he they achieve such power. Democracy is an obstacle to this suppres- wants to profess certain views or spend his leisure in a particular sion of freedom which the centralized direction of economic way, he faces no absolute impediments. There are no dangers to activity requires. Hence arises the clash between planning and bodily security and freedom that confine him by brute force to the democracy. task and environment to which a superior has assigned him. Many socialists have the tragic illusion that by depriving Our generation has forgotten that the system of private private individuals of the power they possess in an individualist property is the most important guarantee of freedom. It is only system, and transferring this power to society, they thereby extin- because the control of the means of production is divided among guish power. What they overlook is that by concentrating power many people acting independently that we as individuals can so that it can be used in the service of a single plan, it is not merely decide what to do with ourselves. When all the means of produc- transformed, but infinitely heightened. By uniting in the hands tion are vested in a single hand, whether it be nominally that of40 41
  • 6. the road to serfdom the road to serfdom ‘society’ as a whole or that of a dictator, whoever exercises this independence which 100 years before had hardly seemed possible. control has complete power over us. In the hands of private indi- The effect of this success was to create among men a new sense viduals, what is called economic power can be an instrument of of power over their own fate, the belief in the unbounded poss- coercion, but it is never control over the whole life of a person. But ibilities of improving their own lot. What had been achieved came when economic power is centralized as an instrument of political to be regarded as a secure and imperishable possession, acquired power it creates a degree of dependence scarcely distinguishable once and for all; and the rate of progress began to seem too slow. from slavery. It has been well said that, in a country where the sole Moreover the principles which had made this progress possible employer is the state, opposition means death by slow starvation. came to be regarded as obstacles to speedier progress, impatiently to be brushed away. It might be said that the very success of liber- alism became the cause of its decline. Background to danger No sensible person should have doubted that the economic Individualism, in contrast to socialism and all other forms of principles of the nineteenth century were only a beginning – that totalitarianism, is based on the respect of Christianity for the there were immense possibilities of advancement on the lines on individual man and the belief that it is desirable that men should which we had moved. But according to the views now dominant, be free to develop their own individual gifts and bents. This philo- the question is no longer how we can make the best use of the sophy, first fully developed during the Renaissance, grew and spontaneous forces found in a free society. We have in effect spread into what we know as Western civilization. The general undertaken to dispense with these forces and to replace them by direction of social development was one of freeing the individual collective and ‘conscious’ direction. from the ties which bound him in feudal society. It is significant that this abandonment of liberalism, whether Perhaps the greatest result of this unchaining of individual expressed as socialism in its more radical form or merely as energies was the marvellous growth of science. Only since indus- ‘organization’ or ‘planning’, was perfected in Germany. During trial freedom opened the path to the free use of new knowledge, the last quarter of the nineteenth century and the first quarter of only since everything could be tried – if somebody could be found the twentieth, Germany moved far ahead in both the theory and to back it at his own risk – has science made the great strides which the practice of socialism, so that even today Russian discussion in the last 150 years have changed the face of the world. The result largely carries on where the Germans left off. The Germans, long of this growth surpassed all expectations. Wherever the barriers to before the Nazis, were attacking liberalism and democracy, capit- the free exercise of human ingenuity were removed, man became alism, and individualism. rapidly able to satisfy ever-widening ranges of desire. By the begin- Long before the Nazis, too, the German and Italian social- ning of the twentieth century the working man in the Western world ists were using techniques of which the Nazis and fascists later had reached a degree of material comfort, security and personal made effective use. The idea of a political party which embraces42 43
  • 7. the road to serfdom the road to serfdom The liberal way of planning all activities of the individual from the cradle to the grave, which claims to guide his views on everything, was first put into practice ‘Planning’ owes its popularity largely to the fact that everybody by the socialists. It was not the fascists but the socialists who began desires, of course, that we should handle our common problems to collect children at the tenderest age into political organizations with as much foresight as possible. The dispute between the to direct their thinking. It was not the fascists but the socialists modern planners and the liberals is not on whether we ought to who first thought of organizing sports and games, football and employ systematic thinking in planning our affairs. It is a dispute hiking, in party clubs where the members would not be infected about what is the best way of so doing. The question is whether we by other views. It was the socialists who first insisted that the should create conditions under which the knowledge and initia- party member should distinguish himself from others by the tive of individuals are given the best scope so that they can plan modes of greeting and the forms of address. It was they who, by most successfully; or whether we should direct and organize all their organization of ‘cells’ and devices for the permanent supervi- economic activities according to a ‘blueprint’, that is, ‘consciously sion of private life, created the prototype of the totalitarian party. direct the resources of society to conform to the planners’ partic- By the time Hitler came to power, liberalism was dead in ular views of who should have what’. Germany. And it was socialism that had killed it. It is important not to confuse opposition against the latter To many who have watched the transition from socialism to kind of planning with a dogmatic laissez faire attitude. The liberal fascism at close quarters the connection between the two systems argument does not advocate leaving things just as they are; it has become increasingly obvious, but in the democracies the favours making the best possible use of the forces of competi- majority of people still believe that socialism and freedom can tion as a means of coordinating human efforts. It is based on the be combined. They do not realize that democratic socialism, the conviction that, where effective competition can be created, it is a great utopia of the last few generations, is not only unachievable, better way of guiding individual efforts than any other. It emphas- but that to strive for it produces something utterly different – the izes that in order to make competition work beneficially a care- very destruction of freedom itself. As has been aptly said: ‘What fully thought-out legal framework is required, and that neither the has always made the state a hell on earth has been precisely that past nor the existing legal rules are free from grave defects. man has tried to make it his heaven.’ Liberalism is opposed, however, to supplanting competition It is disquieting to see in England and the United States today by inferior methods of guiding economic activity. And it regards the same drawing together of forces and nearly the same contempt competition as superior not only because in most circumstances of all that is liberal in the old sense. ‘Conservative socialism’ was it is the most efficient method known but because it is the only the slogan under which a large number of writers prepared the method which does not require the coercive or arbitrary intervention of atmosphere in which National Socialism succeeded. It is ‘conser- authority. It dispenses with the need for ‘conscious social control’ vative socialism’ which is the dominant trend among us now. and gives individuals a chance to decide whether the prospects of44 45
  • 8. the road to serfdom the road to serfdom The great utopia a particular occupation are sufficient to compensate for the disad- vantages connected with it. There can be no doubt that most of those in the democracies who The successful use of competition does not preclude some types demand a central direction of all economic activity still believe of government interference. For instance, to limit working hours, that socialism and individual freedom can be combined. Yet to require certain sanitary arrangements, to provide an extensive socialism was early recognized by many thinkers as the gravest system of social services is fully compatible with the preservation threat to freedom. of competition. There are, too, certain fields where the system of It is rarely remembered now that socialism in its beginnings competition is impracticable. For example, the harmful effects of was frankly authoritarian. It began quite openly as a reaction deforestation or of the smoke of factories cannot be confined to the against the liberalism of the French Revolution. The French writers owner of the property in question. But the fact that we have to resort who laid its foundation had no doubt that their ideas could be put to direct regulation by authority where the conditions for the proper into practice only by a strong dictatorial government. The first of working of competition cannot be created does not prove that we modern planners, Saint-Simon, predicted that those who did not should suppress competition where it can be made to function. obey his proposed planning boards would be ‘treated as cattle’. To create conditions in which competition will be as effective as Nobody saw more clearly than the great political thinker de possible, to prevent fraud and deception, to break up monopolies Tocqueville that democracy stands in an irreconcilable conflict – these tasks provide a wide and unquestioned field for state activity. with socialism: ‘Democracy extends the sphere of individual This does not mean that it is possible to find some ‘middle freedom,’ he said. ‘Democracy attaches all possible value to each way’ between competition and central direction, though nothing man,’ he said in 1848, ‘while socialism makes each man a mere seems at first more plausible, or is more likely to appeal to reason- agent, a mere number. Democracy and socialism have nothing in able people. Mere common sense proves a treacherous guide in common but one word: equality. But notice the difference: while this field. Although competition can bear some mixture of regula- democracy seeks equality in liberty, socialism seeks equality in tion, it cannot be combined with planning to any extent we like restraint and servitude.’ without ceasing to operate as an effective guide to production. To allay these suspicions and to harness to its cart the strongest Both competition and central direction become poor and ineffi- of all political motives – the craving for freedom – socialists began cient tools if they are incomplete, and a mixture of the two means increasingly to make use of the promise of a ‘new freedom’. that neither will work. Socialism was to bring ‘economic freedom’ without which polit- Planning and competition can be combined only by planning ical freedom was ‘not worth having’. for competition, not by planning against competition. The To make this argument sound plausible, the word ‘freedom’ planning against which all our criticism is directed is solely the was subjected to a subtle change in meaning. The word had planning against competition. formerly meant freedom from coercion, from the arbitrary power46 47
  • 9. the road to serfdom the road to serfdom of other men. Now it was made to mean freedom from necessity, reserved for each other the hatred of the heretic. Their practice release from the compulsion of the circumstances which inevitably showed how closely they are related. To both, the real enemy, the limit the range of choice of all of us. Freedom in this sense is, of man with whom they had nothing in common, was the liberal of course, merely another name for power or wealth. The demand for the old type. While to the Nazi the communist and to the commu- the new freedom was thus only another name for the old demand nist the Nazi, and to both the socialist, are potential recruits for a redistribution of wealth. made of the right timber, they both know that there can be no The claim that a planned economy would produce a substan- compromise between them and those who really believe in indi- tially larger output than the competitive system is being progres- vidual freedom. sively abandoned by most students of the problem. Yet it is this What is promised to us as the Road to Freedom is in fact the false hope as much as anything which drives us along the road to Highroad to Servitude. For it is not difficult to see what must be planning. the consequences when democracy embarks upon a course of Although our modern socialists’ promise of greater freedom planning. The goal of the planning will be described by some such is genuine and sincere, in recent years observer after observer has vague term as ‘the general welfare’. There will be no real agree- been impressed by the unforeseen consequences of socialism, the ment as to the ends to be attained, and the effect of the people’s extraordinary similarity in many respects of the conditions under agreeing that there must be central planning, without agreeing ‘communism’ and ‘fascism’. As the writer Peter Drucker expressed on the ends, will be rather as if a group of people were to commit it in 1939, ‘the complete collapse of the belief in the attainability themselves to take a journey together without agreeing where of freedom and equality through Marxism has forced Russia to they want to go: with the result that they may all have to make a travel the same road toward a totalitarian society of unfreedom journey which most of them do not want at all. and inequality which Germany has been following. Not that Democratic assemblies cannot function as planning agencies. communism and fascism are essentially the same. Fascism is the They cannot produce agreement on everything – the whole direc- stage reached after communism has proved an illusion, and it has tion of the resources of the nation – for the number of possible proved as much an illusion in Russia as in pre-Hitler Germany.’ courses of action will be legion. Even if a congress could, by No less significant is the intellectual outlook of the rank and proceeding step by step and compromising at each point, agree on file in the communist and fascist movements in Germany before some scheme, it would certainly in the end satisfy nobody. 1933. The relative ease with which a young communist could be To draw up an economic plan in this fashion is even less converted into a Nazi or vice versa was well known, best of all to possible than, for instance, successfully to plan a military the propagandists of the two parties. The communists and Nazis campaign by democratic procedure. As in strategy, it would clashed more frequently with each other than with other parties become inevitable to delegate the task to experts. And even if, simply because they competed for the same type of mind and by this expedient, a democracy should succeed in planning every48 49
  • 10. the road to serfdom the road to serfdom sector of economic activity, it would still have to face the problem sacrifice freedom in order to make it more secure in the future, of integrating these separate plans into a unitary whole. There but it is quite a different thing to sacrifice liberty permanently in will be a stronger and stronger demand that some board or some the interests of a planned economy. single individual should be given powers to act on their own To those who have watched the transition from socialism to responsibility. The cry for an economic dictator is a characteristic fascism at close quarters, the connection between the two systems stage in the movement toward planning. is obvious. The realization of the socialist programme means the Thus the legislative body will be reduced to choosing the destruction of freedom. Democratic socialism, the great utopia of persons who are to have practically absolute power. The whole the last few generations, is simply not achievable. system will tend toward that kind of dictatorship in which the head of government is from time to time confirmed in his position by popular vote, but where he has all the power at his command to Why the worst get on top make certain that the vote will go in the direction that he desires. No doubt an American or English ‘fascist’ system would greatly Planning leads to dictatorship because dictatorship is the most differ from the Italian or German models; no doubt, if the trans- effective instrument of coercion and, as such, essential if central ition were effected without violence, we might expect to get a planning on a large scale is to be possible. There is no justification better type of leader. Yet this does not mean that our fascist for the widespread belief that, so long as power is conferred by system would in the end prove very different or much less intol- democratic procedure, it cannot be arbitrary; it is not the source of erable than its prototypes. There are strong reasons for believing power which prevents it from being arbitrary; to be free from dictat- that the worst features of the totalitarian systems are phenomena orial qualities, the power must also be limited. A true ‘dictator- which totalitarianism is certain sooner or later to produce. ship of the proletariat’, even if democratic in form, if it undertook Just as the democratic statesman who sets out to plan centrally to direct the economic system, would probably destroy economic life will soon be confronted with the alternative of either personal freedom as completely as any autocracy has ever done. assuming dictatorial powers or abandoning his plans, so the Individual freedom cannot be reconciled with the supremacy totalitarian leader would soon have to choose between disregard of one single purpose to which the whole of society is permanently of ordinary morals and failure. It is for this reason that the unscru- subordinated. To a limited extent we ourselves experience this pulous are likely to be more successful in a society tending toward fact in wartime, when subordination of almost everything to the totalitarianism. Who does not see this has not yet grasped the full immediate and pressing need is the price at which we preserve our width of the gulf which separates totalitarianism from the essen- freedom in the long run. The fashionable phrases about doing for tially individualist Western civilization. the purposes of peace what we have learned to do for the purposes The totalitarian leader must collect around him a group which of war are completely misleading, for it is sensible temporarily to is prepared voluntarily to submit to that discipline they are to50 51
  • 11. the road to serfdom the road to serfdom impose by force upon the rest of the people. That socialism can gain the support of the docile and gullible, who have no strong be put into practice only by methods of which most socialists convictions of their own but are ready to accept a ready-made disapprove is, of course, a lesson learned by many social reformers system of values if it is only drummed into their ears sufficiently in the past. The old socialist parties were inhibited by their loudly and frequently. It will be those whose vague and imper- democratic ideals; they did not possess the ruthlessness required fectly formed ideas are easily swayed and whose passions and for the performance of their chosen task. It is characteristic that emotions are readily aroused who will thus swell the ranks of the both in Germany and in Italy the success of fascism was preceded totalitarian party. by the refusal of the socialist parties to take over the respons- Third, to weld together a closely coherent body of supporters, ibilities of government. They were unwilling wholeheartedly to the leader must appeal to a common human weakness. It seems employ the methods to which they had pointed the way. They to be easier for people to agree on a negative programme – on the still hoped for the miracle of a majority’s agreeing on a particular hatred of an enemy, on the envy of the better off – than on any plan for the organization of the whole of society. Others had positive task. already learned the lesson that in a planned society the question The contrast between the ‘we’ and the ‘they’ is consequently can no longer be on what do a majority of the people agree but always employed by those who seek the allegiance of huge masses. what the largest single group is whose members agree sufficiently The enemy may be internal, like the ‘Jew’ in Germany or the to make unified direction of all affairs possible. ‘kulak’ in Russia, or he may be external. In any case, this technique There are three main reasons why such a numerous group, has the great advantage of leaving the leader greater freedom of with fairly similar views, is not likely to be formed by the best but action than would almost any positive programme. rather by the worst elements of any society. Advancement within a totalitarian group or party depends First, the higher the education and intelligence of individuals largely on a willingness to do immoral things. The principle become, the more their tastes and views are differentiated. If we that the end justifies the means, which in individualist ethics is wish to find a high degree of uniformity in outlook, we have to regarded as the denial of all morals, in collectivist ethics becomes descend to the regions of lower moral and intellectual standards necessarily the supreme rule. There is literally nothing which the where the more primitive instincts prevail. This does not mean consistent collectivist must not be prepared to do if it serves ‘the that the majority of people have low moral standards; it merely good of the whole’, because that is to him the only criterion of means that the largest group of people whose values are very what ought to be done. similar are the people with low standards. Once you admit that the individual is merely a means to Second, since this group is not large enough to give sufficient serve the ends of the higher entity called society or the nation, weight to the leader’s endeavours, he will have to increase their most of those features of totalitarianism which horrify us follow numbers by converting more to the same simple creed. He must of necessity. From the collectivist standpoint intolerance and52 53
  • 12. the road to serfdom the road to serfdom brutal suppression of dissent, deception and spying, the complete The most effective way of making people accept the validity disregard of the life and happiness of the individual are essential of the values they are to serve is to persuade them that they are and unavoidable. Acts which revolt all our feelings, such as the really the same as those they have always held, but which were shooting of hostages or the killing of the old or sick, are treated not properly understood or recognized before. And the most effi- as mere matters of expediency; the compulsory uprooting and cient technique to this end is to use the old words but change their transportation of hundreds of thousands becomes an instrument meaning. Few traits of totalitarian regimes are at the same time of policy approved by almost everybody except the victims. so confusing to the superficial observer and yet so characteristic To be a useful assistant in the running of a totalitarian state, of the whole intellectual climate as this complete perversion of therefore, a man must be prepared to break every moral rule he language. has ever known if this seems necessary to achieve the end set for The worst sufferer in this respect is the word ‘liberty’. It is a him. In the totalitarian machine there will be special opportuni- word used as freely in totalitarian states as elsewhere. Indeed, ties for the ruthless and unscrupulous. Neither the Gestapo nor it could almost be said that wherever liberty as we know it has the administration of a concentration camp, neither the Ministry been destroyed, this has been done in the name of some new of Propaganda nor the SA or SS (or their Russian counterparts) freedom promised to the people. Even among us we have planners are suitable places for the exercise of humanitarian feelings. Yet it who promise us a ‘collective freedom’, which is as misleading as is through such positions that the road to the highest positions in anything said by totalitarian politicians. ‘Collective freedom’ is not the totalitarian state leads. the freedom of the members of society, but the unlimited freedom A distinguished American economist, Professor Frank H. of the planner to do with society that which he pleases. This is the Knight, correctly notes that the authorities of a collectivist state confusion of freedom with power carried to the extreme. ‘would have to do these things whether they wanted to or not: It is not difficult to deprive the great majority of independent and the probability of the people in power being individuals who thought. But the minority who will retain an inclination to criti- would dislike the possession and exercise of power is on a level cize must also be silenced. Public criticism or even expressions of with the probability that an extremely tender-hearted person doubt must be suppressed because they tend to weaken support would get the job of whipping master in a slave plantation’. of the regime. As Sidney and Beatrice Webb report of the position A further point should be made here: collectivism means the in every Russian enterprise: ‘Whilst the work is in progress, any end of truth. To make a totalitarian system function efficiently it is public expression of doubt that the plan will be successful is an act not enough that everybody should be forced to work for the ends of disloyalty and even of treachery because of its possible effect on selected by those in control; it is essential that the people should the will and efforts of the rest of the staff.’ come to regard these ends as their own. This is brought about by Control extends even to subjects which seem to have no polit- propaganda and by complete control of all sources of information. ical significance. The theory of relativity, for instance, has been54 55
  • 13. the road to serfdom the road to serfdom opposed as a ‘Semitic attack on the foundation of Christian and and America are those which the progress of collectivism and its Nordic physics’ and because it is ‘in conflict with dialectical mate- centralistic tendencies are progressively destroying. rialism and Marxist dogma’. Every activity must derive its justifica- tion from conscious social purpose. There must be no spontaneous, unguided activity, because it might produce results which cannot Planning vs. the Rule of Law be foreseen and for which the plan does not provide. Nothing distinguishes more clearly a free country from a country The principle extends even to games and amusements. I leave under arbitrary government than the observance in the former of it to the reader to guess where it was that chess players were the great principles known as the Rule of Law. Stripped of tech- officially exhorted that ‘we must finish once and for all with the nicalities this means that government in all its actions is bound neutrality of chess. We must condemn once and for all the formula by rules fixed and announced beforehand – rules that make it chess for the sake of chess.’ possible to foresee with fair certainty how the authority will use Perhaps the most alarming fact is that contempt for intellectual its coercive powers in given circumstances and to plan one’s liberty is not a thing which arises only once the totalitarian system individual affairs on the basis of this knowledge. Thus, within is established, but can be found everywhere among those who have the known rules of the game, the individual is free to pursue his embraced a collectivist faith. The worst oppression is condoned if it personal ends, certain that the powers of government will not be is committed in the name of socialism. Intolerance of opposing ideas used deliberately to frustrate his efforts. is openly extolled. The tragedy of collectivist thought is that while it Socialist economic planning necessarily involves the very starts out to make reason supreme, it ends by destroying reason. opposite of this. The planning authority cannot tie itself down in There is one aspect of the change in moral values brought advance to general rules which prevent arbitrariness. about by the advance of collectivism which provides special food When the government has to decide how many pigs are to for thought. It is that the virtues which are held less and less in be raised or how many buses are to run, which coal-mines are esteem in Britain and America are precisely those on which Anglo- to operate, or at what prices shoes are to be sold, these decisions Saxons justly prided themselves and in which they were gener- cannot be settled for long periods in advance. They depend inevit- ally recognized to excel. These virtues were independence and ably on the circumstances of the moment, and in making such self-reliance, individual initiative and local responsibility, the decisions it will always be necessary to balance, one against the successful reliance on voluntary activity, non-interference with other, the interests of various persons and groups. one’s neighbour and tolerance of the different, and a healthy In the end somebody’s views will have to decide whose inter- suspicion of power and authority. ests are more important, and these views must become part of Almost all the traditions and institutions which have moulded the law of the land. Hence the familiar fact that the more the state the national character and the whole moral climate of England ‘plans’, the more difficult planning becomes for the individual.56 57
  • 14. the road to serfdom the road to serfdom Is planning ‘inevitable’? The difference between the two kinds of rule is important. It is the same as that between providing signposts and commanding It is revealing that few planners today are content to say that people which road to take. central planning is desirable. Most of them affirm that we now are Moreover, under central planning the government cannot be compelled to it by circumstances beyond our control. impartial. The state ceases to be a piece of utilitarian machinery One argument frequently heard is that the complexity of intended to help individuals in the fullest development of their indi- modern civilization creates new problems with which we cannot vidual personality and becomes an institution which deliberately hope to deal effectively except by central planning. This argument discriminates between particular needs of different people, and is based upon a complete misapprehension of the working of allows one man to do what another must be prevented from doing. competition. The very complexity of modern conditions makes It must lay down by a legal rule how well off particular people shall competition the only method by which a coordination of affairs be and what different people are to be allowed to have. can be adequately achieved. The Rule of Law, the absence of legal privileges of particular There would be no difficulty about efficient control or people designated by authority, is what safeguards that equality planning were conditions so simple that a single person or board before the law which is the opposite of arbitrary government. It could effectively survey all the facts. But as the factors which have is significant that socialists (and Nazis) have always protested to be taken into account become numerous and complex, no one against ‘merely’ formal justice, that they have objected to law centre can keep track of them. The constantly changing conditions which had no views on how well off particular people ought to be, of demand and supply of different commodities can never be fully that they have demanded a ‘socialization of the law’ and attacked known or quickly enough disseminated by any one centre. the independence of judges. Under competition – and under no other economic order – In a planned society the law must legalize what to all intents the price system automatically records all the relevant data. Entre- and purposes remains arbitrary action. If the law says that such preneurs, by watching the movement of comparatively few prices, a board or authority may do what it pleases, anything that board as an engineer watches a few dials, can adjust their activities to or authority does is legal – but its actions are certainly not subject those of their fellows. to the Rule of Law. By giving the government unlimited powers Compared with this method of solving the economic problem the most arbitrary rule can be made legal; and in this way a demo- – by decentralization plus automatic coordination through cracy may set up the most complete despotism imaginable. the price system – the method of central direction is incredibly The Rule of Law was consciously evolved only during the clumsy, primitive, and limited in scope. It is no exaggeration to say liberal age and is one of its greatest achievements. It is the legal that if we had had to rely on central planning for the growth of our embodiment of freedom. As Immanuel Kant put it, ‘Man is free if industrial system, it would never have reached the degree of differ- he needs obey no person but solely the laws.’ entiation and flexibility it has attained. Modern civilization has58 59
  • 15. the road to serfdom the road to serfdom been possible precisely because it did not have to be consciously opment. In the United States a highly protectionist policy aided created. The division of labour has gone far beyond what could the growth of monopolies. In Germany the growth of cartels has have been planned. Any further growth in economic complexity, since 1878 been systematically fostered by deliberate policy. It was far from making central direction more necessary, makes it more here that, with the help of the state, the first great experiment in important than ever that we should use the technique of competi- ‘scientific planning’ and ‘conscious organization of industry’ led tion and not depend on conscious control. to the creation of giant monopolies. The suppression of competi- It is also argued that technological changes have made compe- tion was a matter of deliberate policy in Germany, undertaken in tition impossible in a constantly increasing number of fields and the service of an ideal which we now call planning. that our only choice is between control of production by private Great danger lies in the policies of two powerful groups, organ- monopolies and direction by the government. The growth of ized capital and organized labour, which support the monopol- monopoly, however, seems not so much a necessary consequence istic organization of industry. The recent growth of monopoly is of the advance of technology as the result of the policies pursued largely the result of a deliberate collaboration of organized capital in most countries. and organized labour where the privileged groups of labour The most comprehensive study of this situation is that by share in the monopoly profits at the expense of the community the Temporary National Economic Committee, which certainly and particularly at the expense of those employed in the less well cannot be accused of an unduly liberal bias. The committee organized industries. However, there is no reason to believe that concludes: this movement is inevitable. The movement toward planning is the result of deliberate The superior efficiency of large establishments has not action. No external necessities force us to it. been demonstrated; the advantages that are supposed to destroy competition have failed to manifest themselves in many fields . . . the conclusion that the advantage of large- Can planning free us from care? scale production must lead inevitably to the abolition of competition cannot be accepted . . . It should be noted, Most planners who have seriously considered the practical aspects moreover, that monopoly is frequently attained through of their task have little doubt that a directed economy must be run collusive agreement and promoted by public policies. on dictatorial lines, that the complex system of interrelated activi- When these agreements are invalidated and these policies reversed, competitive conditions can be restored. ties must be directed by staffs of experts, with ultimate power in the hands of a commander-in-chief whose actions must not be Anyone who has observed how aspiring monopolists regularly fettered by democratic procedure. The consolation our planners seek the assistance of the state to make their control effective can offer us is that this authoritarian direction will apply ‘only’ to have little doubt that there is nothing inevitable about this devel- economic matters. This assurance is usually accompanied by the60 61
  • 16. the road to serfdom the road to serfdom suggestion that, by giving up freedom in the less important aspects allowed to choose, and that whoever fixed the reward would deter- of our lives, we shall obtain freedom in the pursuit of higher values. mine not only its size but the way in which it should be enjoyed. On this ground people who abhor the idea of a political dictator- The so-called economic freedom which the planners promise us ship often clamour for a dictator in the economic field. means precisely that we are to be relieved of the necessity of solving The arguments used appeal to our best instincts. If planning our own economic problems and that the bitter choices which this really did free us from less important cares and so made it easier often involves are to be made for us. Since under modern condi- to render our existence one of plain living and high thinking, who tions we are for almost everything dependent on means which our would wish to belittle such an ideal? fellow men provide, economic planning would involve direction of Unfortunately, purely economic ends cannot be separated almost the whole of our life. There is hardly an aspect of it, from from the other ends of life. What is misleadingly called the our primary needs to our relations with our family and friends, ‘economic motive’ means merely the desire for general oppor- from the nature of our work to the use of our leisure, over which tunity. If we strive for money, it is because money offers us the the planner would not exercise his ‘conscious control’. widest choice in enjoying the fruits of our efforts – once earned, The power of the planner over our private lives would be we are free to spend the money as we wish. hardly less effective if the consumer were nominally free to spend Because it is through the limitation of our money incomes that his income as he pleased, for the authority would control produc- we feel the restrictions which our relative poverty still imposes tion. on us, many have come to hate money as the symbol of these Our freedom of choice in a competitive society rests on the restrictions. Actually, money is one of the greatest instruments fact that, if one person refuses to satisfy our wishes, we can turn to of freedom ever invented by man. It is money which in existing another. But if we face a monopolist we are at his mercy. And an society opens an astounding range of choice to the poor man – a authority directing the whole economic system would be the most range greater than that which not many generations ago was open powerful monopolist imaginable. to the wealthy. It would have complete power to decide what we are to be given We shall better understand the significance of the service of and on what terms. It would not only decide what commodities money if we consider what it would really mean if, as so many and services are to be available and in what quantities; it would be socialists characteristically propose, the ‘pecuniary motive’ were able to direct their distribution between districts and groups and largely displaced by ‘non-economic incentives’. If all rewards, could, if it wished, discriminate between persons to any degree instead of being offered in money, were offered in the form of it liked. Not our own view, but somebody else’s view of what we public distinctions, or privileges, positions of power over other ought to like or dislike, would determine what we should get. men, better housing or food, opportunities for travel or education, The will of the authority would shape and ‘guide’ our daily this would merely mean that the recipient would no longer be lives even more in our position as producers. For most of us the62 63
  • 17. the road to serfdom the road to serfdom time we spend at our work is a large part of our whole lives, and others. People just wish that the choice should not be necessary our job usually determines the place where and the people among at all. And they are only too ready to believe that the choice is whom we live. Hence some freedom in choosing our work is not really necessary, that it is imposed upon them merely by the probably even more important for our happiness than freedom to particular economic system under which we live. What they resent spend our income during our hours of leisure. is, in truth, that there is an economic problem. Even in the best of worlds this freedom will be limited. Few The wishful delusion that there is really no longer an economic people ever have an abundance of choice of occupation. But what problem has been furthered by the claim that a planned economy matters is that we have some choice, that we are not absolutely would produce a substantially larger output than the competitive tied to a job which has been chosen for us, and that if one position system. This claim, however, is being progressively abandoned by becomes intolerable, or if we set our heart on another, there is most students of the problem. Even a good many economists with always a way for the able, at some sacrifice, to achieve his goal. socialist views are now content to hope that a planned society Nothing makes conditions more unbearable than the knowledge will equal the efficiency of a competitive system. They advocate that no effort of ours can change them. It may be bad to be just a planning because it will enable us to secure a more equitable cog in a machine but it is infinitely worse if we can no longer leave distribution of wealth. And it is indisputable that, if we want it, if we are tied to our place and to the superiors who have been consciously to decide who is to have what, we must plan the whole chosen for us. economic system. In our present world there is much that could be done to But the question remains whether the price we should have to improve our opportunities of choice. But ‘planning’ would surely pay for the realization of somebody’s ideal of justice is not bound go in the opposite direction. Planning must control the entry to be more discontent and more oppression than was ever caused into the different trades and occupations, or the terms of remun- by the much abused free play of economic forces. eration, or both. In almost all known instances of planning, the For when a government undertakes to distribute the wealth, establishment of such controls and restrictions was among the by what principles will it or ought it to be guided? Is there a first measures taken. definite answer to the innumerable questions of relative merits In a competitive society most things can be had at a price. It that will arise? is often a cruelly high price. We must sacrifice one thing to attain Only one general principle, one simple rule, would provide another. The alternative, however, is not freedom of choice, but such an answer: absolute equality of all individuals. If this were orders and prohibitions which must be obeyed. the goal, it would at least give the vague idea of distributive justice That people should wish to be relieved of the bitter choice clear meaning. But people in general do not regard mechanical which hard facts often impose on them is not surprising. But few equality of this kind as desirable, and socialism promises not want to be relieved through having the choice made for them by complete equality but ‘greater equality’.64 65
  • 18. the road to serfdom the road to serfdom This formula answers practically no questions. It does not general level of wealth ours has, the first kind of security should free us from the necessity of deciding in every particular instance not be guaranteed to all without endangering general freedom; between the merits of particular individuals or groups, and it gives that is: some minimum of food, shelter and clothing, sufficient to no help in that decision. All it tells us in effect is to take from the preserve health. Nor is there any reason why the state should not rich as much as we can. When it comes to the distribution of the help to organize a comprehensive system of social insurance in spoils the problem is the same as if the formula of ‘greater equality’ providing for those common hazards of life against which few can had never been conceived. make adequate provision. It is often said that political freedom is meaningless without It is planning for security of the second kind which has such economic freedom. This is true enough, but in a sense almost an insidious effect on liberty. It is planning designed to protect opposite from that in which the phrase is used by our planners. individuals or groups against diminutions of their incomes. The economic freedom which is the prerequisite of any other If, as has become increasingly true, the members of each trade freedom cannot be the freedom from economic care which the in which conditions improve are allowed to exclude others in socialists promise us and which can be obtained only by relieving order to secure to themselves the full gain in the form of higher us of the power of choice. It must be that freedom of economic wages or profits, those in the trades where demand has fallen off activity which, together with the right of choice, carries also the have nowhere to go, and every change results in large unemploy- risk and responsibility of that right. ment. There can be little doubt that it is largely a consequence of the striving for security by these means in the last decades that unemployment and thus insecurity have so much increased. Two kinds of security The utter hopelessness of the position of those who, in a Like the spurious ‘economic freedom’, and with more justice, society which has thus grown rigid, are left outside the range of economic security is often represented as an indispensable condi- sheltered occupation can be appreciated only by those who have tion of real liberty. In a sense this is both true and important. Inde- experienced it. There has never been a more cruel exploitation of pendence of mind or strength of character is rarely found among one class by another than that of the less fortunate members of a those who cannot be confident that they will make their way by group of producers by the well-established. This has been made their own effort. possible by the ‘regulation’ of competition. Few catchwords have But there are two kinds of security: the certainty of a given done so much harm as the ideal of a ‘stabilization’ of particular minimum of sustenance for all and the security of a given standard prices or wages, which, while securing the income of some, makes of life, of the relative position which one person or group enjoys the position of the rest more and more precarious. compared with others. In England and America special privileges, especially in the There is no reason why, in a society which has reached the form of the ‘regulation’ of competition, the ‘stabilization’ of66 67
  • 19. the road to serfdom the road to serfdom particular prices and wages, have assumed increasing importance. satisfy the new demands, we shall not unwittingly destroy values With every grant of such security to one group the insecurity of which we still rate higher. the rest necessarily increases. If you guarantee to some a fixed part The conflict with which we have to deal is a fundamental one of a variable cake, the share left to the rest is bound to fluctuate between two irreconcilable types of social organization, which proportionally more than the size of the whole. And the essential have often been described as the commercial and the military. element of security which the competitive system offers, the great In either both choice and risk rest with the individual or he is variety of opportunities, is more and more reduced. relieved of both. In the army, work and worker alike are allotted The general endeavour to achieve security by restrictive by authority, and this is the only system in which the individual measures, supported by the state, has in the course of time can be conceded full economic security. This security is, however, produced a progressive transformation of society – a transforma- inseparable from the restrictions on liberty and the hierarchical tion in which, as in so many other ways, Germany has led and the order of military life – it is the security of the barracks. other countries have followed. This development has been hastened In a society used to freedom it is unlikely that many people by another effect of socialist teaching, the deliberate disparagement would be ready deliberately to purchase security at this price. of all activities involving economic risk and the moral opprobrium But the policies which are followed now are nevertheless rapidly cast on the gains which make risks worth taking but which only few creating conditions in which the striving for security tends to can win. become stronger than the love of freedom. We cannot blame our young men when they prefer the safe, If we are not to destroy individual freedom, competition must salaried position to the risk of enterprise after they have heard be left to function unobstructed. Let a uniform minimum be from their earliest youth the former described as the superior, secured to everybody by all means; but let us admit at the same more unselfish and disinterested occupation. The younger gener- time that all claims for a privileged security of particular classes ation of today has grown up in a world in which, in school and must lapse, that all excuses disappear for allowing particular press, the spirit of commercial enterprise has been represented groups to exclude newcomers from sharing their relative pros- as disreputable and the making of profit as immoral, where to perity in order to maintain a special standard of their own. employ 100 people is represented as exploitation but to command There can be no question that adequate security against the same number as honourable. severe privation will have to be one of our main goals of policy. Older people may regard this as exaggeration, but the daily But nothing is more fatal than the present fashion of intellectual experience of the university teacher leaves little doubt that, as a leaders of extolling security at the expense of freedom. It is essen- result of anti-capitalist propaganda, values have already altered tial that we should re-learn frankly to face the fact that freedom far in advance of the change in institutions which has so far taken can be had only at a price and that as individuals we must be place. The question is whether, by changing our institutions to prepared to make severe material sacrifices to preserve it.68 69
  • 20. the road to serfdom We must regain the conviction on which liberty in the Anglo- Saxon countries has been based and which Benjamin Franklin expressed in a phrase applicable to us as individuals no less than as nations: ‘Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.’ Toward a better world To build a better world, we must have the courage to make a new start. We must clear away the obstacles with which human folly has recently encumbered our path and release the creative energy of individuals. We must create conditions favourable to progress rather than ‘planning progress’. It is not those who cry for more ‘planning’ who show the necessary courage, nor those who preach a ‘New Order’, which is no more than a continuation of the tendencies of the past 40 years, and who can think of nothing better than to imitate Hitler. It is, indeed, those who cry loudest for a planned economy who are most completely under the sway of the ideas which have created Originally published in Look magazine this war and most of the evils from which we suffer. The guiding principle in any attempt to create a world of free Reproduced from a booklet published by men must be this: a policy of freedom for the individual is the only General Motors, Detroit, in the ‘Thought Starter’ series (no. 118) truly progressive policy.70
  • 21. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s72 73
  • 22. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s74 75
  • 23. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s76 77
  • 24. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s78 79
  • 25. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s80 81
  • 26. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s82 83
  • 27. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s84 85
  • 28. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s86 87
  • 29. the road to serfdom t h e roa d to s e r f d o m i n c a rto o n s88 89

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